Trail of debt all the way to China

As Xin Shunkang, Beijing’s man in Harare, loudly sang the last notes of Zimbabwe’s national anthem, Simudzai mureza wedu weZimbabwe, in flawless Shona, one Zimbabwean official leaned over, grinned and asked a journalist: “Can your Americans do that?”

Robert Mugabe chose to celebrate his 86th birthday at a foreign embassy and the glee on his face was telling as Xin led the choir of his embassy staff in song. This was the first time in his 30-year rule that Mugabe had entered a foreign mission, said a beaming foreign affairs minister, Simbarashe Mumbengegwi.

Zimbabweans derisively call cheap-quality Chinese goods “zhing-zhong”.
But there is no doubting the quality of China’s diplomacy and how it is protecting its own commercial clout in the resource-rich country while others are losing theirs.

Over cake, Mugabe gushed: “We treasure this friendship. It’s not really the relations that count, but the love, alliance and understanding.”

There is more to confirm China’s tightening hold on Zimbabwe, from the large contracts being awarded to Chinese companies to the packed Chinese-language classes at the country’s largest university.

But the true extent of China’s hold on Zimbabwe will be seen in how Mugabe treats Chinese investors in his campaign to “indigenise” the economy. Large Chinese corporates control key Zimbabwean industries. China’s Sinosteel owns 92% of Zimbabwe’s largest ferrochrome producer, Zimasco. Sino-Cement owns one of the country’s largest cement factories, and China Sonangol has been awarded contracts ranging from housing to mining.

Under Zimbabwe’s empowerment laws, they would have to give up 51%. But history, Zimbabwe’s debts and the leverage China has over Mugabe because of its role as his protector at the United Nations will likely make Chinese investors more indigenous than their Western rivals.

Chinese money has not relented on Zimbabwe. Government’s ­mineral marketer recently signed a deal to sell undisclosed amounts of the country’s nickel, cobalt and copper to China’s Jinchuan Nickel Mining Company. Other Chinese companies are taking over unused mining claims ceded to government by established miners, such as Zimplats, the Implats arm.

China is building what it calls “the biggest glass factory” in Zimbabwe. The military buys Chinese fighter jets and other arms and Chinese traders are the biggest bidders at Zimbabwe’s ivory auctions.

Chinese technology giants ZTE and Huawei have won contracts worth more than US$200-million from leading private telecoms operators to build mobile phone and broadband infrastructure. Last month China extended a US$53-million grant to NetOne, the loss-making state-owned mobile operator, prompting talk of a takeover despite the empowerment laws.

With the West holding back on credit, ambassador Xin says his country last year poured US$300-million into Zimbabwe. This is far short of what Zimbabwe expected from an old friend, but it is much more than what’s coming from a sceptical West.

Last week Mugabe expressed gratitude for China’s veto of United States and British attempts to bring UN sanctions on Zimbabwe. But that veto has left him at China’s bidding. Little is ever disclosed about the terms of the loans and critics fear Mugabe could be secretly mortgaging family jewels.

But Xin disputes Western images of a greedy China gorging on African resources, telling a military academy on Monday that his country was all about “developing Africa’s resources”.

Yet there are recent suggestions of old friendships unravelling. Following a recent visit to China, Deputy Prime Minister Arthur Mutambara claimed Beijing now sees Zimbabwe only as a business partner and not as a friend. China would not give any more loans until Zimbabwe paid back what it already owed, he said.

“The Chinese have said: ‘We’ll not condemn you publicly, but we’ll not give you cash.’ Unless we do the right thing, the Chinese will not work with us,” Mutambara said.

But just as Mutambara suggested a shift, China agreed to reschedule by three years a US$55-million debt owed by Zimbabwe’s largest steel-maker. This has been China’s ­winning approach—easy loans, far removed from the conditional aid of the International Monetary Fund and the World Bank.